It's human nature for people to want to do business with companies that provide a good shopping experience. Over time, a consistently positive experience will lead some to become loyal customers. Loyal customers are much more valuable to the business because they advocate for you to their friends, they become less price sensitive, they require less service and support, they are easier to up-sell, and they are less likely to shop the competition. If this is easy to understand, the more difficult challenge is to accurately measure the economic impact a loyal customer provides versus a satisfied one or even a dissatisfied customer.

There have been several studies that have measured the economic impact of the customer experience. The economic impact of providing an outstanding customer experience is dramatic. Peter Kriss, a senior research scientist at Medallia and the director of research for vision prize published in the Harvard Business Review 8/1/2014 some interesting statistics based on two companies with different revenue models. One was transactional and the other was subscription-based. The transaction-based business is interested in how soon a customer returns. Customers In a transaction-based business who have the best experiences spend 140% more compared to those who have the poorest past experience. A subscription based business is interested in how long a customer remains loyal. Their findings showed that a member having the poorest experience only had a 43% chance of being a member the following year, compared to a member who gives one of the top two experience scores has a 74% chance of being a member the following year. Future membership length is also predictable based on customer experience. The customer with the lowest score is likely to remain a member for a little over a year while the member who gives the highest score is likely to remain a member for another six years.

The argument I often hear for not investing in measuring the customer experience is that they are busy with other priorities right now and measuring their experience is expensive. What asset has more value to your business than the customer? Consistently delivering great experiences to your customers, reduces the cost to serve customers from what it was previously. Also, reducing dissatisfaction significantly reduces your cost. It reduces returns, discounts, service requirements, and negative advertising in the marketplace. Sprint focused on improving their customer experience and reported a reduction in customer care costs by as much as 33%.

If you are not measuring your customer experience today, it's time to connect the right data to quantify the impact of the difference between delivering a great experience and delivering the poor one. It will show everyone how much of an impact it can have on the organization and their jobs.

Acadia Business Advisors, LLC

Acadia Business Advisors, LLC was founded in 2008 by Bruce Wildes to help owners and managers of small and mid-market businesses work on their business as they work in their business. We help define the vision, mission, and goals. We then develop the strategy, define the tactics, manage the process, and measure the results. First, we do market research, frequently applying the methodology of the Net Promoter's Score or System. Whether its customer engagement or loyalty, it is often tied to the level of employee engagement or loyalty within the organization, which translates to the culture set by the senior leadership of the organization. We apply the vision and mission of the organization, along with the strategy and tactics to reach the goal, then measure the results.

Bruce has over 25 years of award winning leadership experiences within start-up divisions of Fortune 500 companies to turnarounds within small family businesses. If you work in your business but need help working on your business and you like the value of an independent outside perspective that only strives to act in your best long term interest, contact us today.

Is your business hitting the bullseye in every metric? What is your vision, mission, and your goals for you and your company this year? In 5 years? What is your strategy? What are your tactics? Is it written down? If you don't have this in place for 2017 and beyond...call us today to help you hit the bullseye this year!

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